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Time to Take a Bite Out of Apple ETFs Now?

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The Apple (AAPL - Free Report) stock, which has so far been a laggard in the artificial intelligence (AI) race, has picked up momentum. Apple shares have surged 14% past month, outperforming the Zacks Computer & Technology sector’s return of 5.8%. Much of the credit goes to its newly announced AI initiatives.

The iPhone maker announced its much-awaited generative AI initiative called “Apple Intelligence” at its WWDC conference in Cupertino, CA, in mid-June. Apple Intelligence is positioned as a distinctive offering that understands users and their data (read: Bet on "Apple Intelligence" With These ETFs).

Updates to its iPhone and Mac operating systems will now allow access to ChatGPT through a partnership with developer OpenAI. ChatGPT can also be used to boost other tools, including text and content generation.

Apple Intelligence will be deeply integrated across the company's hardware and software products. It will be available for the iPhone 15 Pro, iPads and Macs running Apple's M1 series chips and newer models starting this fall.

Privacy-Focused Cloud Services

Apple has developed a new cloud service called Private Cloud Compute to ensure user privacy. This service uses Apple Silicon with built-in privacy capabilities, determining if a request can be processed on-device or needs cloud access. Apple assures that no user information will be stored in the cloud.

Comparison With Competitors

Wall Street had long awaited Apple’s entry into generative AI, following Microsoft’s (MSFT - Free Report) OpenAI-powered Bing chatbot (Copilot) and Google’s (GOOG, (GOOGL - Free Report) Bard chatbot, now named Gemini. Meta (META - Free Report) has also integrated AI into its platforms through recommendation software and the Meta AI chatbot. Amazon (AMZN - Free Report) has also been very much in the AI race.

Broker Rating

Apple currently has an average brokerage recommendation (ABR) of 1.68 on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on actual recommendations (Buy, Hold, Sell etc.) made by 30 brokerage firms. The current ABR compares to an ABR of 1.82 a month ago based on 30 recommendations.

Of the 30 recommendations deriving the current ABR, 19 are Strong Buy and three are Buy. Strong Buy and Buy, respectively, account for 63.33% and 10% of all recommendations. A month ago, Strong Buy made up 56.67%, while Buy represented 10%.

How to Play With ETFs?

Since there still are uncertainties related to the success of Apple’s upcoming AI rollout, it is better to track the company with the ETF approach. The basket approach minimizes the company-specific concentration risks. Apple-heavy ETFs include the likes of Technology Select Sector SPDR Fund (XLK - Free Report) , iShares Global Tech ETF (IXN - Free Report) and iShares U.S. Technology ETF (IYW - Free Report) .

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